Microsoft, Adobe Competition Heats Up

It has not escaped Microsoft's attention that some of the coolest sites on
the Web -- YouTube and MySpace included -- get much of their flash from Flash
and other design programs sold by Adobe Systems Inc.

But as Microsoft Corp. gets ready to ship its own line of tools for designers
and Web developers, the world's largest software maker finds it must also defend
against Adobe on its home turf, the desktop. At the same time, the line between
Internet and desktop programs is blurring -- and both companies see an opportunity
to capture new business.

Microsoft Corp. is preparing to launch Expression Studio, a suite of design
software that will go head-to-head with Adobe's flagship tools, Photoshop and
Illustrator. It also will include a tool for building multimedia programs to
bring it in line with Adobe's Flash. At $599 for the suite, Expression is a
steal compared with the $1,000 or more Adobe charges for its Web developer suites.

Expression Web, a Web authoring tool to compete with Adobe's Dreamweaver, is
already on the market. On Monday, the company said its Flash-like
browser plug-in, Silverlight, will be released in beta at the end of the
month. Both programs enable multimedia presentations that work regardless of
the viewer's Web browser or operating system.

Adobe, meanwhile, started shipping Monday its Creative Suite 3, an upgrade
to Photoshop and other core programs. Adobe touted smoother integration with
Flash and Dreamweaver, which the company acquired when it bought Macromedia
Inc. nearly two years ago.

This is just the latest clash between the two as Microsoft, dominant in operating
system and desktop software, sizes up the smaller, Web-savvy Adobe. The software
companies also are battling over standards for the paperless office and tools
for displaying content on and building applications for mobile phones and handheld
computers.

Microsoft, whose core loyalists are the millions of developers who build desktop
programs, has little history with professional designers. While its amateur
Web authoring tool, FrontPage, racked up more sales at retail than competing
products in 2006, Web professionals have been complaining since the mid-1990s
the code it generates doesn't work well with non-Microsoft Web browsers.

This time around, Microsoft said Expression Web will generate HTML and other
code that complies with industry standards. It's also discontinued FrontPage.

Forest Key, the creative-sector veteran Microsoft hired to lead the Expression
Studio charge, acknowledged that the company is reaching well beyond its traditional
base, but said the company needs designers in order to stay competitive as software
evolves.

"The state of user experience is just dramatically shifting," said
Key, who came to Microsoft from Macromedia.

Microsoft's Expression tools will also let graphic designers try their hand
at creating desktop software. In the past, designers worked in Photoshop, then
handed a static picture off to programmers, who often had a hard time translating
it into a working Web site or application. Expression's programs let designers
draw and manipulate images using a familiar interface, but behind the scenes
the tools also generate code programmers can work with.

"Making Windows applications previously was like this black art,"
said Lee Brimelow, a senior design technologist at Frog Design who has been
working with Microsoft's new tools to design Yahoo Inc.'s instant messaging
client for Windows Vista. Now, you "don't have to be a Microsoft programming
geek to do it."

Microsoft also is eyeing a new breed of applications that combine the power
of desktop programs with Web-style multimedia, design and data from various
sources. The software maker recently showed off the TimesReader, a hybrid version
of The New York Times' Web site built with Expression tools, that lets users
download the news, then click around a Web-like interface even when offline.

Microsoft points out that its hybrid applications can take advantage of a local
PC's graphics card to create intricate 3-D interfaces, for instance, that would
be impossible with older Web tools.

Adobe isn't sitting idle.

Apollo, as Adobe calls the early version of its hybrid technology, lets Web
developers and designers wrap up all the pieces of a sophisticated Web site
-- HTML and Ajax coding, Flash videos and animation, and even PDFs -- and turn
them into a program that can run on the desktop even if the computer is offline.

On Monday, Adobe announced one of its first Apollo-based programs, a media
player that plays Flash video from the desktop. An eBay Inc. hybrid application
is also in the works.

"We've been working with the designer space for, gosh, how many years?
Upwards of 15? We really understand how designers do what they do," said
Michele Turner, vice president of Adobe's platform business unit. "And
they understand how to use our tools."

While Microsoft's hybrid applications can only be built on a Windows computer,
and will only run on a Windows computer, programs built on Apollo work on any
operating system.

Analysts watching the clash say the success of either company's bid could come
down to which platform designers and Web developers choose to build out the
next wave of desktop programs.

"The one with more applications will be the winner," said Trip Chowdhry,
an analyst at Global Equities Research.

If the most interesting programs are built using Flash, people may see less
of a need to buy a Windows PC next time they upgrade their computers, some analysts
said.

For Microsoft, the notion that Adobe could take a bite out of Windows' 96 percent
share of operating systems worldwide may not be an immediate threat, but that
doesn't mean the company will let it slide.

"Microsoft can afford to think in a 10-year timeframe," said Rob
Helm, research director at Directions on Microsoft, an independent research
group. "When you've got a business like Windows that has 80 percent margins
and 90-plus percent market share, even a 10-year threat to shave 10 percent
off the business is enough to do something about now."

In the end, this round may come down to whether designers and Web developers
will invest the time it takes to learn Microsoft's tools and put up with an
end product that only works on Windows.

Greg Storey, a Web designer and developer in Orange County, Calif., is a longtime
Mac and Adobe user. He complained that Adobe has added so many features that
its software is starting to feel bloated -- a critique often leveled at Microsoft
programs -- but that doesn't mean he's going to stop using it.

"To me, it's the difference between driving a Mercedes and driving a Ford,
and Windows is definitely the Ford," he said.

Also, he isn't interested in limiting his audience.

"Even though the Mac users and Linux users might be a small percentage,
they're a percentage nonetheless," Storey said. "I would much rather
make it so that more people can see my work than fewer people can see it."